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A SIP, or Systematic Investment Plan, is a method of investing money. It allows individuals to invest a fixed amount at regular intervals rather than making one large investment(lump sum investment). It allows individuals to invest in a disciplined and systematic manner. This is important because it allows for regular savings—even if the amount is small, it can add up over time.
SIPs also offer investors an easy, convenient way to invest without having to worry about timing the market. Instead of trying to predict when is the best time to make an investment with SIP you can just set up an account and let it run.
A SIP Calculator is a tool created to help investors like you in determining how much they need to invest on a regular basis in order to achieve a specific financial goal. The calculator takes into account the amount of the investment, the frequency of the investment, and the expected returns on your investments.
By using this calculator, you can create
- Create personal investment plans that meet your goals.
- Get a sense of amount you have invested & estimated return
Our calculator takes three main factors into account.
- Amount of the initial investment (P)
- Frequency of the investment(n)
- Expected rate of return(i)
SIP Returns = P × ({([1 + i]^n) – 1} / i) × (1 + i)
In this formula
P -> Amount you invest in SIP
i -> Interest rate you are expecting to get
n -> Number of total SIPs made
So according to the formula, If you do a SIP of 5000 for 5 years and the expected annual return are 12% then SIP Return can be calculated as
P = ₹5000
n = 12 * 5 Months
i = 12 % = (12/100) / 12 Monthly
Sip Returns = 5000 x ({([1 +0.01 ]^60) – 1} / 0.01) × (1 + 0.01)
= ₹ 412431.8
So the final return on your SIP after 5 years with 12% interest annual would turn into ₹ 412431.8
FAQs
A SIP calculator is a simple algorithm-based tool to give investors an idea of return on their SIP investment.
It helps you calculate the return on your investment based on the inputs given. It let you calculate return under different investment scenarios and compare them so that you can adjust your financial goals accordingly.
It works on user input. You'll need to enter your monthly installment, investment tenure, and expected return and the SIP calculator will compute the result in a few seconds. It calculates the return on compound interest formula.
Angel One SIP return calculator is designed on a simple algorithm so that anyone can use it.
Angel One's systematic investment calculator is simple and straightforward enough for anyone to use it. To use the calculator, the user has to follow the steps mentioned below:
- Select an investment amount
- Select the frequency of investment
- Select total investment tenure
- Set expected return rate
The SIP investment calculator will return the result in a few seconds.
The advantages of using SIP calculator online are,
- Using the SIP calculator, you can guess the return on your mutual fund investment at the end of the investment period
- With clarity over return amount, you can plan your finances better and adjust investment goals
- Using the SIP calculator to compare different investment scenarios you can select the best mutual funds for investment.
SIP isn't an investment tool. Instead, it is one of the two ways to invest in mutual funds.
Yes, you can adjust your SIP amount at your convenience.
You can start with as little as Rs 500 and invest up to any amount you want. But your investment must align with the rest of your financial commitments – your income minus existing expenses, liabilities, and loan payment.
How much should you invest? Use the SIP calculator to compare return values in different investment situations to select the best one.
There is no maximum limit. However, the minimum tenure is fixed at three years.
The benefits are as following:
- Instil regular investment habit
- No need to time market
- Benefits of starting early even with a small amount
- Benefits from rupee cost averaging
- Simple way of investing through ECS.
The advantage with SIP is that you don't have to time the market. It is a safe method to invest in mutual funds. SIP works on the principles of rupee cost averaging, which means more units get allocated when the market is down and fewer units when it is rallying.
No, SIP doesn't limit you to any investment amount. However, the installment amount should depend on your monthly income, existing liabilities, and future financial goals. After taking these factors into account, choose an investment amount.
Your SIP will not get terminated for missing one SIP. If you don't have enough money in a month, you can skip SIP payment. You'll not get penalized for that.
It should be based on your financial goals.
SIP doesn't have a lock-in period, meaning that you can withdraw/stop any time. There is no penalty imposed.
